The Color of Money

by Mehrsa Baradaran

  Romney, who admitted that he was not as astute a politician as Nixon, had underestimated white suburbanites’ fear and racism. Nixon had understood it—the government “can’t force blacks into housing," explained Nixon, “or we’ll have a war." Nixon was so sure that integration was a losing issue that he urged his staff “to nail every Democratic senator and congressmen to the cause of ‘compulsory integrated housing.’ " Integration was “political poison."30

  Nixon tried the poison on Romney, labeling him an integrationist in order to force him to quit in 1970. Romney didn’t flinch. Then Nixon tried to send Romney to Mexico as an ambassador. In refusing the post, Romney tried to explain his position to the president, probably believing that if Nixon could be convinced of the merits of the issue, he would understand. Romney wrote, “It is becoming increasingly clear that the lower, middle income and the poor, white, black and brown family, cannot continue to be isolated in the deteriorating core cities without broad scale revolution.” He underlined this sentence. But it was Romney who did not understand that Nixon was not interested in the merits of racial integration, having perfectly understood its politics. Nixon responded by shutting Romney out of the administration until Romney finally resigned in 1972. In his resignation letter, Romney wrote the president, “I want to thank you for the privilege of serving the nation under your great leadership. The experience has been a rewarding and invaluable one that, among other things, has deepened my understanding of our country’s political processes.” It is hard not to detect a hint of sarcasm.31

  Once Romney left, no other administration would pursue active integration again.32 Instead, they would follow Nixon’s strategy of enforcing the FHA through litigating cases of outright discrimination. In choosing only to enforce cases of demonstrated bias, the administration made it clear that it would only concern itself with racial and not economic discrimination.33 In other words, a community could refuse all low-income housing even if that meant maintaining an all-white community. There was no plan to deal with systemic segregation or the effects of past discrimination. Roy Wilkins called the distinction between economic and racial discrimination “hogwash,” but in 1971 the Supreme Court upheld the distinction in James v. Valtierra, holding that a California town had the right to prevent public housing within its borders. Even though the town’s vote to exclude housing for the poor meant that they were effectively excluding minorities, it was not unconstitutional discrimination because they were not explicitly discriminating against black residents. The brief representing the town’s position stated, “If the poor want the affluent to provide them with housing, it would seem only reasonable that they should expect and be willing to accept the willing consent of a simple majority of those persons who are expected to help pay.”34

  Dempsey Travis remarked that “[i]n the 1960s, John Fitzgerald Kennedy turned on the light at the end of the housing corridor for black Americans. Lyndon Johnson kept it burning but Richard Milhous Nixon turned it off in the 1970s."35 Nixon did not turn off the light unilaterally, however; he did it with the willing consent of the majority of the public who were unwilling to pay any price for integration. De facto segregation would continue, which meant that the ghetto economic trap would too.

  Having seen the handwriting on the wall, black leaders had already stopped pushing for integration. “Integration is as dead as a doornail," said CORE director Roy Innis. “If a man is broke and hungry," said Floyd McKissick, “he needs bread and money, not [to] sit down beside a white man." Stokely Carmichael explained the problem with integration: “We should begin with the basic fact that black Americans have two problems: they are poor and they are black. But integration speaks not at all to the problem of poverty, only to the problem of blackness."36 However, poverty and segregation were indeed linked, and integration could have addressed the poverty by working to break down the ghetto money trap. But it hardly mattered because white society rejected integration in any case.

  There were still two separate and unequal economies, but instead of trying to merge the two, black leaders demanded economic control, self-determination, and some form of start-up capital to build up the economy of the ghetto. “If we are to proceed toward liberation, we must cut ourselves off from the white people," said a Student Nonviolent Coordinating Committee (SNCC) manifesto. “We must form our own institutions, credit unions, co-ops, political parties, write our own histories."37

  If there was any platform that nationalists, militants, integration-ists, and moderates could agree on in the late 1960s, it was the imperative of wealth, property ownership, and community economic strength.38 No doubt the shift was in part a result of the emptiness of the civil rights reforms. F. Naylor Fitzhugh, vice president of PepsiCola, explained, “Ten years ago when the militants criticized the system, they were talking about the political system. Today when they are talking about the system, they are talking about the economic system. They have seen the controls that the economic system exerts over the political."39 Urban violence had drawn national attention to economic issues instead of legal rights. “Teenagers with jobs don’t throw Molotov cocktails,” explained A. Philip Randolph. “Bad conditions make for violence,” Floyd McKissick wrote in the New York Times. Black leaders were not asking for charity or government aid; they were demanding power and control.40 “Ownership,” said McKissick, was “the only answer to keeping Black people from becoming a totally dependent population.” “We had full employment of the hard core under slavery,” quipped Berkeley G. Burrell, National Business League director. “Today we want a piece of the action in the mainstream business system.”41

  On the first anniversary of King’s death, April 25, 1969, the Interreligious Foundation for Community Organization called a National Black Economic Development Conference to discuss plans for black economic advancement. If the transformation of the civil rights movement could be distilled into a single moment, it might be when James Forman stepped to the podium to offer his “Black Manifesto.” Forman himself embodied the changing tone, message, and ideology of the cause. In 1961, Forman was a leader in SNCC. By 1969, he had become a leading member of the Black Panthers. He went from marching alongside King, asking for peaceful integration, to proclaiming that “only an armed, well-disciplined, black controlled government can insure the stamping out of racism in this country.”42

  His speech was called “Total Control as the Only Solution for the Economic Needs of Black People.” In it, he put forth his manifesto, which was a demand for reparations for slavery. “We, the black people . . . are fully aware that we have been forced to come together because racist white America has exploited our resources, our minds, our bodies, our labor.” Forman demanded $500 million—or “$15 per nigger”—to be paid by Christian churches and Jewish synagogues whose members were complicit in capitalism’s exploitation of black labor.43

  Demands for reparations were not just provocations by the Black Panthers and other radical groups; they usually took the form of realistic proposals with concrete details. In 1968, two hundred black separatists met in Detroit to plan a “Republic of New Africa,” which was to be a separate sovereign nation built in the South through reparations, with its own government and elected officials, “forever free and independent of the jurisdiction of the United States.”44 Economist Richard F. America Jr. proposed that 10 percent of Fortune 500 companies should be turned over to black control. He wanted the government to use its antitrust powers to confiscate businesses and transfer ownership to black businessmen. He envisioned that eight companies would be transferred to black control each year for fifteen years, at which point “Blacks will have achieved economic parity roughly equivalent to their proportion of the population."45

  With these radical demands as a backdrop, other black scholars, leaders, and businessmen offered more politically practical plans for economic development. In 1969, there was Dunbar S. McLaurin’s Ghetto Economic Development and Industrialization Plan (called the “Ghediplan"), which was akin to a domestic
Marshall Plan. Outside funds would help the ghetto develop itself into a thriving community. McLaurin had a significant banking background and believed that the obstacles black entrepreneurs faced were much bigger than just capital and training. The ghetto resembled an “underdeveloped country," and its businesses were cut off from the outside economy, he said.46 Central to the plan was a provision to spur black banking in the ghetto. “If we accept the premise that no business community can achieve its full business potential without adequate banking facilities, it is easily seen that the Negro business community is suffering from this situation."47 The Ghediplan asked New York City to allocate $200 million to a fund that would guarantee financing for businesses in the ghetto, with the fund to be administered by banks within the ghetto.48

  The CORE plan for community development stood out from the rest because, in an unlikely turn of events, a watered-down version of the proposal made its way to the Senate in 1968. Roy Innis called the plan “separatist economics"; it was based on black liberation through control of institutions inside the black community. Innis viewed the proposal as both compensation for past wrongs and a new contract with black America for the future. “The constitution of the United States of America, which is a national contract for this nation, was never meant for Black people. . . . The obvious solution then is a new social contract (constitution). This contract will redefine the relationship between Blacks and Whites."49 He said that blacks could achieve liberation only through total control of their own institutions.50 The authors of the plan, Innis and Floyd McKis-sick, had not started out as separatists. In fact, CORE was a leading integrationist organization in the early part of the decade; but like other leaders, they had moved on. In one sense, they were admitting defeat. “We are past the stage," wrote Innis, “where we can talk seriously of whites acting toward blacks out of moral imperatives. It doesn’t work." The idea of supporting a separatist economy appealed to several Republicans, who brought the bill to Congress.

  The Community Self-Determination Bill proposed creating a Community Development Corporation (CDC), which would act like a conglomerate corporate and charitable foundation in urban ghettos.51 Each adult individual in the community would be able to buy shares in the CDC, which in turn would own controlling shares in other companies within the community. The Community Development Bank (CDB) would be a wholly owned subsidiary of the CDC modeled after the Federal Home Loan Banks; it would offer loan guarantees on mortgage and business loans. The CDB would be funded like the World Bank or the Import-Export Bank—the Treasury would sell $400 million in bonds on the market at 6 percent interest. The government would provide the initial credit for the bank, but without the use of any taxpayer funds. The government’s stock would earn dividends for the Treasury, which would offset any interest or principal payments on the bonds. The bank would thus be selffinancing with a kick-start credit boost from Treasury.52

  The bill, co-drafted by CORE, was a foreshadowing of the political alliances that would converge on Nixon’s black capitalism initiatives: the bill’s sponsors included liberal Republican Jacob Javits of New York and conservative Republican John Tower of Texas. Many legislators spoke in favor of the bill, including Republican Senator Charles Percy from Illinois, who quoted one of his constituents with approval: “Away with Black Power. Away with Soul Power. What we need to make it in this atomic age is borrowing power. The difference between Black Power and White Power is—White Power has more green in it."53 In fact, then presidential candidate Nixon met with Innis and McKissick to discuss the plan, after which the black leaders endorsed the candidate.54 In return, Nixon endorsed their bill in July of 1968, calling it “an imaginative proposal" for economic development in the ghetto “for building pride and independence, for enlisting the energies of private enterprise and creating new institutions by which private capital can be made available for ghetto investment." He also liked the fact that it was under Republican sponsorship.

  There was opposition to the bill. The AFL-CIO called the bill “apartheid antidemocratic nonsense." Surprisingly, and revealing the complex relationship inherent in the black business community, the bill’s most vocal opposition came from black business representatives. The National Business League came to Congress to oppose the bill because they saw it as a threat to already established black businesses. One of the most vocal opponents was William Hudgins, president of black-owned Freedom National Bank of Harlem, who said that he opposed the bill because it would undercut existing black banks. The president of the National Bankers Association, Edward Irons, also opposed the bill.55

  These objections to a plan that was ostensibly good for the ghetto vindicated Frazier, Malcolm X, Abram Harris, and all those who had long felt that black businessmen were no better than the white exploiters. The most recent critic of the black business class was psychologist Kenneth Clark, who in his 1965 book Dark Ghetto described them as “insecure" in their power and wealth and “estranged from black society." Unsure of his social standing, the black businessman was “conservative and careful of his wealth," and reluctant to “share it with the ghetto community at large." Clark blamed the ghetto economy itself for creating this “ghetto pathology," which he defined as “an unwillingness to make any voluntary sacrifice" for the community because the ghetto itself “demanded so many involuntary ones."56

  Perhaps it was insecurity and selfishness that caused a few black business representatives to oppose the bill. Perhaps black businesses opposed the bill for other reasons, for instance, because they had not been asked to help design it. This was the charge leveled by the Reverend Franklin Florence of the FIGHT Corporation of Rochester, whose organization was one of the models on which the bill was based. He protested loudly during the hearings: “If this is to be a community self-determination bill," he quipped, “then we better start by letting the black community determine what should be in the bill."57

  When the senators realized that the bill did not have the support of the entire black community, they backed away from it.58 But the bill’s failure was probably due to more than just the opposition from a few black leaders. One of the labor lobbyists said of the failure, “You know, if there had been some evidence that Nixon was really interested in any of this, none of those blacks would have jumped on it like they did. They would have tried to work something out beforehand. I think it’s a sideshow, and everybody senses it."59 The bill had been the only plan sponsored by black separatists to have any political traction at all. After this failure, further plans would come from within the administration without any community input, and none would resemble anything as broad in scope as the plans proposed by the CORE leaders—though they would certainly use the same language: black and white leaders alike were using words like “economic self-help," “minority entrepreneurship," “community economic development," and “ghetto self-determination." If there was a common denominator among these groups, it was that it was more realistic to shore up ghetto businesses than to improve it out of existence, to paraphrase James Baldwin.

  During the 1968 election, each candidate had a platform plank related to black economic self-determination. Before his assassination, Robert Kennedy had been the frontrunner in the Democratic primary His community development program was the most robust and holistic of the lot; it included tax incentives for businesses, Community Development Corporations, job training programs, and government funding for antipoverty programs. The eventual 1968 Democratic candidate, Hubert Humphrey, called his proposal “Black Entrepreneurship: Need and Opportunity for Government Help," which put forth a number of plans geared to “enhance black pride and quell black insurgency." His plan included more funding for businesses through Small Business Administration (SBA) programs initiated by the Johnson administration, and called for the creation of an “urban development bank" to fund businesses in the ghetto.60 For Humphrey, black capitalism was a part of his reform package, which included a continuation of War on Poverty programs. In the presidential race, Humphrey jabbed at Nixon�
�s black capitalism plan, calling it “double talk." When Nixon promised voters that the program would cost little, Humphrey retorted, “Of course it will take money. Talking about black capitalism without capital is just kiting political checks."61

  The check may have had insufficient funds, but Nixon’s double talk on black capitalism paid political dividends. Nixon’s “southern strategy" was effective because he used race as a wedge issue without actually talking about race. For example, by associating crime with blackness and promising “law and order," he could signal allegiance to white voters fearful of blacks without sounding like a racist.62 Black capitalism was another side of the strategy. By associating blacks with welfare dependency and embracing “black enterprise,” he was able to cut economic aid to the ghetto and oppose integration in the guise of promoting black power. By using the unobjectionable and racially neutral rhetoric of free-market capitalism, Nixon undermined black demands for economic redress and reparations.

  He unveiled this strategy in a series of campaign ads and speeches. In one ad, called “The Wrong Road,” across images of poverty-stricken, mostly brown and black faces, and a sign saying “Government Checks Cashed Here,” Nixon’s voice explained, “For the past five years we’ve been deluged by programs for the unemployed—programs for the cities—programs for the poor. And we have reaped from these programs an ugly harvest of frustration, violence and failure across the land.” This was a subtle subversion of the Kerner Commission’s language, which called violence the harvest of racism. Now violence was a result of government aid—never mind that the violence preceded the poverty programs. Then the music became more upbeat, and the camera panned across images of construction sites, a factory line, a shipyard, and the candidate intoned, “We should enlist private enterprise to solve the problems of America.”63